WHY ADR IS SMART BUSINESS. PANEL DISCUSSION April 17, 2001

Transcription

1 WHY ADR IS SMART BUSINESS PANEL DISCUSSION April 17, 2001

2 Report Documentation Page Report Date 17APR2001 Report Type N/A Dates Covered (from... to) - Title and Subtitle Why ADR is Smart Business - Panel Discussion Contract Number Grant Number Program Element Number Author(s) Ingersoll, Bob; Demisch, Wolfgang; Crider, Greg; Oen, Jennifer; Hammer, Brian Project Number Task Number Work Unit Number Performing Organization Name(s) and Address(es) The Boeing Company Sponsoring/Monitoring Agency Name(s) and Address(es) NDIA (National Defense Industrial Association 2111 Wilson Blvd., Ste. 400 Arlington, VA Performing Organization Report Number Sponsor/Monitor s Acronym(s) Sponsor/Monitor s Report Number(s) Distribution/Availability Statement Approved for public release, distribution unlimited Supplementary Notes Proceedings from ADR (Alternate Dispute Resolution) Conference, April 2001 sponsored by NDIA, The original document contains color images. Abstract Subject Terms Report Classification unclassified Classification of Abstract unclassified Classification of this page unclassified Limitation of Abstract UU Number of Pages 34

3 WHY ADR IS SMART BUSINESS Corporate Contractor Perspective Bob Ingersoll, Vice President Contracts and Pricing, Boeing Wall Street View Wolfgang Demisch, Managing Director, Dresdner Kleinwort Wasserstein

4 ADR Tools for a Successful Settlement Scheduling Analysis Greg Crider or Jennifer Oen, Directors at Peterson- Barrington Independent Pricing in ADR Brian Hammer, Chief Financial Officer, Tucker Alan Inc.

5 Alternative Dispute Resolution The Boeing Company Robert J. Ingersoll Vice President, Contracts & Pricing The Boeing Company

6 Alternative Disputes Resolution Why ADR? Gunship Experience with ADR Boeing s Commitment Key elements for ADR Success - Using ADR for a Win-Win

7 Why ADR? No perfect contracts - unforeseen problems occur ADR Facilitates open information exchange Involves stakeholders - increases buy-in Focuses on facts Provides structured environment/process Reduces adversarial nature of conflict management Dispute cycle time reduction and cost avoidance Improves long-term partnering

8 Gunship ADR The ADR approach facilitated moving long standing dispute issues to resolution years in pouring cement around our respective positions Affordability, cycle time and the relationship were blurred by past attitudes and litigation process 3 years in FCC - once ADR identified, settlement reached in 6 months

9 Why ADR Worked Participation by high level executives on both sides with limited prior program ties Environment of mutual respect & dedication at program management level Well-developed document base existed Availability of key program personnel Open exchanges by all involved Knowledgeable, well respected & truly neutral mediator

10 Boeing s Commitment Boeing ADR Agreements: Initial company to execute Air Force Overarching Agreement for ADR CPR pledge agreement signed Boeing working to deploy ADR approaches company-wide Targeted for application on all programs Engaging suppliers in use of ADR Using ADR for employee/company disputes Process Councils have a Stakeholder responsibility

11 Key Elements for ADR Success Commitment from Leadership Re-enforcing attitude & behavior Take the right issues into ADR Training and awareness Keep the ADR process simple (user friendly) Fund & resource the process Promote common sense resolution Success: win-win resolutions!

12 Wall Street View Wolfgang Demisch, Managing Director, Dresdner Kleinwort Wasserstein

13 Air Force/NDIA ADR Conference: Why ADR Is Smart Business The Expert s Role in the ADR Process Jennifer Oen, Director Greg Crider, Director Peterson Barrington Consulting San Antonio, TX - April 17, 2001

14 Key Elements for ADR Success Adequate Preparation Effective Presentation Accurate Litigation Risk Assessment

15 Schedule Experts: Analysis of issues Adequate Preparation Identification of impact ( causal link ) Assessment of responsibility for delay Cost Experts: Quantification of damages Objective, independent assessments of causation schedule impact financial impact

16 Effective Presentation Role of Schedule Expert Assessment of As-Planned schedule Assessment of As-Built schedule Identification of critical path Analysis of issues Assessment of responsibility for delay and disruption

17 Schedule Expert s Role Task CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep As-planned 12 Month Delay As-planned

18 Schedule Expert s Role As-planned Task CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Engineering Avionics Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test Production

19 Schedule Expert s Role As-planned Critical Path Task CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Engineering Avionics Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test Production

20 Schedule Expert s Role As-Built Task CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Engineering Avionics Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test Production

21 Schedule Expert s Role As-Built Critical Path Task CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Engineering Avionics Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test Production

22 Schedule Expert s Role As-Built Delay Quantification Task Engineering Avionics CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 3 mos CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 1 mo Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test 1 mo 2 mos 4 mos Production Total Delay = 12 months 2 mos

23 Schedule Expert s Role As-Built Delay Quantification Task Engineering Avionics CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 3 mos CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 1 mo Weapons Systems Special Equipment H/W S/W Integration Software Aircraft Mod Flight Test Production 2 mos 1 mo 4 mos 2 mos

24 Schedule Expert s Role Issue Analysis and Causation ISSUES Green A/C Delays Avionics Delay CY 01 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec CY 02 CY 03 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Responsibility Air Force Contractor Shared Software Development Changes Design Changes TOTAl Issue Impact To Critical Path: 3 months delay 1 month delay 2 mos delay 2 months delay 4 months delay

25 Accurate Litigation Risk Assessment Combined effort of company, counsel and outside experts Realistic assessment of potential litigation risk associated with each issue/cause of action Legal/entitlement risk Quantum/pricing risk Basis for making/assessing settlement offers

26 Alternative Dispute Resolution Brian M. Hammer Chief Financial Officer TUCKER ALAN INC.

27 Topics What Makes ADR Successful? How Does An Independent Assessment Benefit The ADR Process? Improving Linkage Between Entitlement, Causation And Pricing Some Differences Between Litigation And ADR ADR Is Smart Business TUCKER ALAN INC.

28 What Makes ADR Successful? Both Parties Willing To Have Open Discussions Decision Makers Are Motivated And Have Authority To Settle Case Sufficient Time At ADR For Each Side To Tell Its Story Proper Focus On Big Ticket Issues Neutral Mediator / Arbitrator Proper Timing ADR Is Smart Business TUCKER ALAN INC.

29 Using Independent Assessments In The ADR Process Independent Parties Can Include Internal Non-Advocate Review Teams Outside Counsel Outside Consultants Perform Assessments Prior To ADR Provide An Impartial View Of Case Strengths And Weaknesses To Decision Makers ADR Is Smart Business TUCKER ALAN INC.

30 What Do Independent Parties Bring To The Process? ADR Experience An Understanding Of Litigation Risks / Likely Outcomes Ability To Communicate Complex Issues In Simple Terms Alternative Approaches And Solutions Independence That Can Help Break Through Communication And Trust Issues ADR Is Smart Business TUCKER ALAN INC.

31 Elements Of A Claim Entitlement Causation Pricing ADR Is Smart Business TUCKER ALAN INC.

32 Linkage Between Entitlement, Causation And Pricing Entitlement And Causation Determine Appropriate Pricing Methodology(ies) Total Cost, Modified Total Cost, Discrete, Other Effort Should Be Balanced Between Entitlement, Causation And Pricing Issues Don t Waste Time On Issues With Little Or No Financial Impact ADR Is Smart Business TUCKER ALAN INC.

33 The Two-Pronged Approach To Improving Linkage Two-Pronged Approach Price Issues Identified During The Legal Review Quantify Cost Growth By Function, Task, Time And Determine Causes Of Growth Perform Overall Reconciliation Of Cost Growth, Claimed Costs And Unclaimed Costs By Element Don t Miss The $500 Million Gorilla ADR Is Smart Business TUCKER ALAN INC.

34 Some Differences Between Litigation And ADR Litigation Filters Communications ADR Allows Decision Makers To Hear Directly From Attorneys, Fact Witnesses And Experts Litigation Discovery Is Formal And Restrictive ADR Often Allows Subject Experts To Discuss And Resolve Issues Face-To-Face Analyses Fully Supported By Time Of Trial ADR Often Takes Place Mid-Stream Requires Flexibility On Both Sides ADR Is Smart Business TUCKER ALAN INC.

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